The Federal Trade Commission (FTC) recently published a reminder to debt collectors of the Fair Debt Collection Practices Act (FDCPA) compliance risks that are created by the use of social media or text messages in connection with debt collection efforts.

The FTC highlights the following FDCPA prohibitions and requirements and provides examples of how the use of social media or text messages can violate such prohibitions or requirement:

  • Collectors cannot use deceptive means to collect a debt. The FTC discusses enforcement cases in which it has challenged the sending of texts that allegedly used false pretenses to get consumers to call back the debt collector. As an example, the FTC notes an enforcement action in which the debt collector was alleged to have sent text messages indicating that the consumer's payment using a card was declined and directing the debtor to call a designated phone number immediately. Other examples of deceptive actions given by the FTC are a request to join a debtor's social media (e.g. a Facebook ''friend request'') that does not disclose that the person reaching out to the consumer is a debt collector or an attempt to obtain location information about a consumer by using false pretenses to approach a friend or coworker. Such an attempt might involve the use of a fake Facebook account to send a friend request to a debtor's social connections as way to obtain address or asset information.

  • Collectors must provide certain disclosures in the initial communication and any subsequent communications with a debtor. The FTC notes that these disclosures are required in text messages.

  • Collectors cannot reveal the existence of the debt to a third party or publish ''a list of consumers who allegedly refuse to pay debts.'' The FTC notes that these prohibitions are particularly relevant in the social media context ''where a post on Facebook, Twitter, or Tumblr can instantly be viewed by others—and especially by consumers' social connections.''

Collectors cannot collect charges unless the charge is expressly authorized by the agreement creating the debt or permitted by law. The FTC notes that debt collectors cannot use social media or text messages to collect illegal charges.

The FTC also observes that some industry members use their websites and social media pages ''to offer helpful information for consumers'' and calls on the industry to ''consider whether lawfully using these platforms to offer general information can benefit both your company and consumers.''

In December 2013, the Federal Financial Institutions Examination Council, whose members include the Consumer Financial Protection Bureau (CFPB), issued final supervisory guidance ''Social Media: Consumer Compliance Risk Management Guidance.'' The Guidance was intended to help financial institutions manage the risks of interacting with consumers through social media. Among the topics discussed in the Guidance was how the use of social media can run afoul of the FDCPA. In November 2013, the CFPB issued an Advance Notice of Proposed Rulemaking (ANPR) on debt collection. In response to the ANPR, industry commenters have asked the CFPB to provide exceptions and/or guidance as to how to give FDCPA disclosures with text messages.

While not mentioned in the FTC's blog, the use of text messages by debt collectors also raises Telephone Consumer Protection Act (TCPA) compliance issues. In particular, the TCPA requires ''prior express consent'' for prerecorded or autodialed collection calls, which include text messages, to a debtor's cell phone.

On May 5, 2016, Ballard Spahr attorneys will hold a webinar ''Using Social Media and Texts for Debt Collection? Avoiding Liability Under the FDCPA and Other Laws'' from 12 p.m. to 1 p.m. ET. The webinar registration form is available here.

Attorneys in Ballard Spahr's Consumer Financial Services Group regularly advise clients on compliance with the FDCPA and state debt collection laws and defend clients in FDCPA lawsuits and enforcement matters. The Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).


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